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TMI Blog2021 (3) TMI 405X X X X Extracts X X X X X X X X Extracts X X X X ..... ation u/s 12A. Otherwise also, if any transaction of the trust which are incidental or ancillary towards fulfillment of the objects of other general public utility, will not normally amount to business trade or commerce, unless there is some intention to carry out business, trade or commerce on a permanent basis or for a reasonable continuity. The LD. DIT has not brought any evidence or material on record to show that the assessee was carrying out the activities on business or commercial principle or outside its objects. Thus on the facts of the present case it cannot be held that assessee's case is hit by proviso to section 2(15) or the registration granted earlier can be canceled within the ambit of section 12AA(3). Accordingly, we herein set aside the order of the CIT(A) and direct the A.O to allow the assessee‟s claim for exemption under Sec.11 - Decided in favour of assessee. - ITA Nos. 5590 And 5591/MUM/2019 - - - Dated:- 8-3-2021 - Shri M. Balaganesh (Accountant Member) And Shri Ravish Sood (Judicial Member) For the Assessee : Shri Vipul Joshi, A.R For the Revenue : Shri Tharian Oommen, D.R ORDER PER RAVISH SOOD, J.M: The captio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scrutiny assessment under Sec. 143(2) of the Act. On a perusal of the details, it was observed by the A.O that the assessee had claimed exemption under Sec. 11 of the Act. After deliberating on the objects of the assessee trust, the A.O held a conviction that it existed for the purpose of development of contractors and services to construction industries in India. As noticed by the A.O the primary objects of the assessee trust was to promote and foster feelings of unity, cooperation and mutual help with a purpose to eliminate unhealthy competition and unfair trade practices amongst the contractors and the allied operators. As observed by the A.O the assessee had claimed that its activities were charitable in nature on the ground that it was engaged in advancement of an object of a general public utility. However, the A.O was not persuaded to subscribe to the aforesaid claim of the assessee. It was observed by the A.O that as per the post-amended Sec. 2(15) of the Act i.e after 01.04.2009, any activity of rendering any services in relation to any trade, commerce and business for a cess or any other consideration, irrespective of the nature of use or application or retention of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he nature of trade, commerce or business and services to its members in relation to trade, commerce and business for a consideration, which irrespective of the nature of use or application or retention of the income from such activity could not be brought within the purview of charity. Accordingly, the A.O referring to the post amended proviso‟ to Sec. 2(15) of the Act observed that the objects of the assessee trust and its activities were in the nature of trade, commerce or business (including any activities of rendering any services in relation to any trade, commerce or business for a cess or fee or any other consideration irrespective of the nature of use or application, or retention of the income from such activity). Accordingly, on the basis of his aforesaid observations the A.O concluded that as the assessee‟s activities did not fall within the realm of the definition of charitable purpose‟ within the meaning of the amended provisions of Sec. 2(15) thus, its claim for exemption under Sec. 11 did not merit acceptance. 4. Alternatively, the A.O observed that the assessee had claimed an amount of ₹ 88,12,907/- as accumulation under Sec. 11(1)(a) i.e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f arranging seminars, collecting participation fees from participants, interest income and sale of publications. Accordingly, the CIT(A) was of the view that as the assessee was carrying on activities in the nature of commerce thus, its objects could not be considered as for charitable purpose‟. After referring to the Finance Bill, 2008 as per which Sec. 2(15) of the Act was amended, the CIT(A) was of the view that pursuant to the aforesaid amendment where the assessee trust carried out business mainly with the objective of earning profit than to carry out charitable work, it would be hit by the proviso to Sec. 2(15) of the Act. As regards the reliance placed by the assessee on the orders passed by the Tribunal in its own case for A.Y. 2010-11 and A.Y. 2011-12, the CIT(A) held a conviction that the aforesaid orders were not only distinguishable on facts but in fact had been passed without considering the judgment of the Hon‟ble Supreme Court in the case of Sole Trustee Loksikshan Trust Vs. CIT (1975) 101 ITR 234 (SC). Backed by his aforesaid conviction, the CIT(A) was of the view that the assessee‟s claim under Sec.11 was not allowable for the year under consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, had been looked into by the Tribunal in the assessee‟s own case for A.Y. 2009-10 in ITA No. 550/Mum/2012, dated 12.01.2015. After exhaustive deliberations as regards the nature of activities of the assessee trust and its receipts in the backdrop of the observations of the lower authorities, the Tribunal had observed that the assessee‟s case would not be hit by the proviso‟ to Sec. 2(15) of the Act, observing as under : 7. We have heard the rival submissions, and perused the relevant finding given in the impugned order and the material placed on record. Assessee is an association of builders which has been registered under the Societies Registration Act, 1860 and also under Bombay Public Trust Act, 1950. Looking to its object, which were mainly for advancement of general public utility, it was granted registration u/s 12, vide certificate dated 24.04.1989. The solitary reason for cancelling the registration u/s 12AA(3) by the Ld. DIT is that, in view of proviso to section 2(15) brought in the statute w.e.f. A.Y. 2009-10, the registration granted earlier should be cancelled, because some of the receipts of the assessee are in the nature of trade, commerce, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s introduced with effect from 1st April, 2009, the scope and ambit of the said proviso to section 2(15) of the Act has to be examined and considered. Earlier orders under section 10(23C)(iv) are not relevant and are inconsequential, as they have not examined the scope and ambit of the first proviso. The proviso applies only if an institution is engaged in advancement of any other object of general public utility and postulates that such an institute is not charitable if it is involved in carrying on any activity in the nature of trade, commerce or business or any activity of rendering any service in relation to any trade, commerce or business. The second part, any activity of rendering any service in relation to any trade, commerce or business obviously intends to expand the scope of the proviso to include services, which are rendered in relation to any trade, commerce or business. The proviso further stipulates that the activity must be for a cess or fee or any other consideration. The last part states that the proviso will apply even if the cess or fee or any other consideration is applied for a charitable activity/purpose. The proviso has to be given full effect to. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or manufacture or nay adventure or concern in the nature of trade commerce or manufacture. The intention of the legislature is to make the definition extensive as the term inclusive has been used. The legislature has deliberately departed from giving a definite import to the term business hut made reference to several other general terms like trade . commerce . manufacture and adventure or concern in the nature of trade, commerce and manufacture. 29. It may be, however, pointed out that the term profit motive is not only the sole or relevant consideration that has to be kept in mind. It is one of the aspects. Normally intention to earn profit is required. Emphasis, however, it does appear, has shifted and the concept and principle of economic activity has gained acceptability. The definition of the term business may also vary when we are examining taxability under Sales-tax, Excise Duty, Value Added Tax, etc. because these are not taxes on income but the taxable even occurs because of the economic activity involved. Even if a person/an organization is carrying on trading on the principle of no loss no profit , it may be liable to pay taxes or comply with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xamined on its own facts. If the principle and ratio laid down by the Hon'ble High Court is applied in the instant case, it would be seen that none of its receipts can be said to be arising or accruing from the activities which can be said to be for the purpose of business or in the nature of trade or commerce. Here in this case all the activities are carried out in accordance with the objects and none of its activities have been found to be non genuine. The assessee's explanation before the DIT regarding nature of receipts clearly shows that they have been received from the members while pursuing objects of the society, specifically mentioned in the objects for which it was granted registration u/s 12A. 9. Otherwise also, if any transaction of the trust which are incidental or ancillary towards fulfillment of the objects of other general public utility, will not normally amount to business trade or commerce, unless there is some intention to carry out business, trade or commerce on a permanent basis or for a reasonable continuity. The LD. DIT has not brought any evidence or material on record to show that the assessee was carrying out the activities on business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng, that the assessee would be hit by the proviso to Sec. 2(15)‟ of the Act the A.O disallowed the assessee‟s claim for exemption under Sec. 11 of the Act. Accordingly, on the basis of his observations recorded in the assessment order the A.O vide his order passed under Sec. 143(3), dated 22.08.2016 assessed the income of the assessee trust at ₹ 64,61,890/-. 12. Aggrieved, the assessee assailed the assessment order before the CIT(A). However, the CIT(A) not finding favour with the claim of the assessee as regards its entitlement for exemption under Sec.11 of the Act upheld the assessment framed by the A.O and dismissed the appeal. 13. The assessee being aggrieved with the order of the CIT(A) has carried the matter in appeal before us. As the facts and the issue involved in the present appeal remains the same as was there before us in the assessee‟s appeal for the immediately preceding year i.e A.Y. 2013-14 in ITA No. 5590/Mum/2019 thus, our order therein passed shall apply mutatis mutandis for the purpose of disposal of the present appeal. Accordingly, in terms of our observations and the reasoning given while disposing off the assessee‟s appe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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